- Defendants, acting in London, were charged with conspiring to restrict the terms of certain kinds of insurance available in the US, in violation of the Sherman Act
- Issue: is there prescriptive jurisdiction to apply the Sherman Act, or any US law, to conduct that occurs in another country?
- The Sherman Act has typically been interpreted according to the objective territorial principle – it deals with conduct that occurs outside the US but has a substantial and harmful effect inside the United States
- Previous decisions found that he Sherman Act extended overseas; the new question was how far the Sherman Act extended
- Majority Opinion (Souter): the Sherman Act does apply to the acts in question
- Does not address international law in depth; he merely addresses comity
- He frames the question as whether principles of comity ought to lead the court to exercise judicial restraint and not exercise jurisdiction over the London insurance companies
- He says that there is only an issue where the laws of two states conflict in such a way that one cannot comply with the laws of one country without violating the laws of the other country: “The only substantial question in this case is whether ‘there is in fact a true conflict between domestic and foreign law’.”
- He finds that there is no conflict between US and British law (seems though he almost jumps right to the third part of the Restatement test in Section 403)
- Though the US made illegal what was legal in England, compliance with US law would not require violation of British law, so it’s ok
- Is Souter right in suggesting that this is the only question that needs to be addressed?
- The Restatement reasonableness test says no – you still have to establish 1) that there is a recognized basis for prescriptive jurisdiction, and then 2) that it is reasonable for the state to exercise jurisdiction in the given case (look to reasonableness factors in Restatement); then you would perform Souter’s analysis
- Dissent: Scalia
- The principle question is whether the Sherman Act reaches the conduct in question
- First, he looks at two cannons of statutory construction in American law:
- 1) “legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States”
- Sherman Act was already found to apply extraterritorially
- 2) “an act of Congress ought never to be construed to violate the laws of nations if any other construction remains” (Charming Betsy)
- prescriptive jurisdiction
- He then performs the analysis Souter should have performed to determine if the Sherman act applies to the case at hand:
- you have to establish 1) that there is a recognized basis for prescriptive jurisdiction, and then 2) that it is reasonable for your state to exercise jurisdiction in the given case (look to reasonableness factors in Restatement); then perform an analysis similar to Souter’s analysis (can you apply the law of your state without requiring the defendant to violate the laws of the other state?)
- Reasonableness analysis:
- He recognizes that the UK has a great interest in maintaining jurisdiction over this issue
- He also says that the US interest in regulating here is slight, because of another act that allowed for the Sherman Act to be overridden (if the Sherman Act can be overridden, it can’t be that important)
- Scalia concludes that it is unreasonable for the United States to apply its law here
- Is it really unreasonable for the US to apply its law in this situation, given that the act in question was intended to have a negative effect on the United States?
- Why did Scalia reach this result? Are there any advantages to the result he reached?
- It may be better to be certain which country gets to regulate the actions of companies
- It may be easier for US companies to compete on a level playing field in the UK if they aren’t subject to US regulation
- Flip the sides – do we want the UK to be able to do this to the US
- Whose opinion was better – Souter or Scalia?
- We think Souter’s outcome might have been better, but Scalia’s analysis was definitely better – follow this analysis
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